I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
This is the End and a New Beginning
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I've been thinking about this for some time.
After 21 years of writing this blog almost daily, I've decided to stop
writing the daily updates on the blog.
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Silver Deep Dive
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Silver had a memorable year (+148%). Some of this can be explained by a
decline in the dollar. I decided to do some ML analysis to look for other
insights....
If we can't make it back to the red line, then I say bend that red line down to meet us! This is America $#$ $#$# it! (I also propose that we swear politely using only numbers and dollars signs, in honor of our new economy.)
I offer three charts using data from the recently released Flow of Funds Accounts of the United States.
The chart above shows our collective net worth over the years. It is not seasonally adjusted. I have included an exponential growth trend line. It peaked in June of 2007 and two months later I started this blog.
The chart above attempts to remove the inflationary effects to better show the change in real prosperity. In inflation adjusted terms, net worth peaked in December of 2006. Whether or not it is the absolute peak is anyone's guess. You can pretty much guess what I suspect.
Total net worth has gone nowhere in the last decade. It's even worse than it looks though. It's the same amount of total net worth split amongst a larger population. In January of 2000 there were 281 million people in America. Now there are 309 million. We have 10% more people but roughly the same overall net worth. Therefore, the average American is 10% poorer than they were 10 years ago.
The chart above has been put on a log scale. Constant exponential growth, such as the red trend line, is therefore seen as a straight line. Optimists would say that we are still on that line. This is just a short-term setback. I am extremely skeptical. We've never been so far below the line. I just do not see how we can get back to it.
There are enormous challenges and headwinds in our future. We're borrowing massive amounts of money to keep the party going. Meanwhile, my state is attempting to raise taxes yet again.
The Senate has proposed $890 million in new taxes, including a tax on bottled water, a three-tenths of a cent increase in the state-sales tax, a boost to tobacco taxes, and an end to certain tax exemptions.
The House has proposed $680 million in new taxes, but its package does not include a sales-tax increase.
This is not an environment where prosperity can flourish. That's my opinion and I'm sticking to it.
NEW YORK — With unemployment high and personal wealth diminished, how was it that strapped consumers were paying down their credit card debt last year? It turns out they probably weren't.
The bulk of 2009's drop in credit card debt instead came because banks were forced to write off loans consumers failed to pay, according to an analysis of Federal Reserve data.
It’s Wednesday, and the week’s U.S. oil inventories numbers will soon be out. I have no clue what they will say, nor much interest, either. But others do.
Exactly why oil traders and speculators think the data has anything to do with the state of world oil demand is beyond me. I suppose, like Pavlov’s dog, they’re only doing what they’re trained to do. But their training comes from a world that no longer exists.
Inventory levels no longer matter. It is different this time.
Between explosive growth in oil-thirsty economies like China and India, and OPEC’s voracious appetite for its own fuel, OECD fuel markets are becoming increasingly marginal.
He is yet another believer in the Chinese economic miracle story.
In a world where affordable oil supply will soon peak, if it hasn’t already done so, global oil consumption quickly becomes a zero-sum game.
How will China and India continue to "grow explosively" if "affordable oil supply will soon peak"?
Perhaps inventories didn't matter in 2008 either. Let's look to see what he said then.
Mr. Rubin recently predicted oil would gravitate towards US$200 a barrel, driving by soaring consumption in China and the Middle East and constrained supplies.
In hindsight, oil gravitated to $145 a barrel. Soaring transportation costs actually ignited deflation though and oil crashed back down to $30+.
The report argues a mild U.S. recession will be no cure-all for rising inflation which it sees staying around 4% next year and forcing the U.S. Federal Reserve to raise interest rates into a recovery.
In hindsight, we got a severe recession. The non-seasonally adjusted CPI-U rose a grand total of 0.025% from May 2008 to January 2010 (from 216.632 to 216.687). The Fed Fund Rate was 2% in May 2008. It now sits at 0.25%.
But while its size was impressive, what would distinguish BlackRock was its state- of-the-art system for evaluating and managing risk. With 5,000 computers running 24 hours a day, overseen by a team of engineers, mathematicians, analysts, and programmers, BlackRock’s “computer farm” could monitor millions of daily trades and scrutinize every single security in its clients’ investment portfolios to see how they would be affected by even the most minor changes in the economy. Churning through 200 million calculations each week, its computers could simulate every imaginable shift in interest rates, every conceivable change in the financial markets, and stress-test the performance of hundreds of thousands of securities in numerous global-crisis scenarios.
Here are the facts we are told.
5,000 computers running 24 hours a day! 200 million calculations per week!
It sounds extremely impressive, but let's do the math.
200,000,000,000 / 5,000 / 7 / 24 / 60 = 4
That's 4 calculations per computer per minute.
I think Blackrock needs to upgrade their computers to something a bit faster.
Might I suggestsomethingfrom the period 2700–2300 BC.
Let me try to do this justice. I'm running with a screen resolution of 1280 x 1024. There's 1.3 million individual pixels of color on my screen. In order change the screen's image, every single one of those pixel's colors must be set individually. If it took just one calculation per pixel then it would take one of Blackrock's computers 227 days to update my screen.
Raw computing horsepower, baby. That's what I'm talking about, lol.
Clearly Blackrock's computers are faster than that. I'm heckling the idea that 200 million calculations per week is an even remotely useful statistic to us though. It's like saying that the knob goes to 4. Nothing more.
Though a single 3.2 GHz cell processor can deliver over 200 GFLOPS, whereas the Sony PS3 configuration delivers approximately 150 GFLOPS, the approximately tenfold cost difference per GFLOP makes the Sony PS3 the only viable technology for HPC applications.
What's 150 GFLOPS you might ask? It's 150 billion floating point operations per second. That's what my single Playstation 3 sitting in my family room can do. My PS3 can do roughly 750 times more calculations than 5,000 BlackRock computers working in concert, or so I am told. It doesn't take a week either. It only takes one second. Hahaha!
Vanity Fair's 200 million calculations per week claim is the funniest statistic I have seen in a long, long time.
Here's a look at the seasonally adjusted apparel index on a log chart. Constant exponential growth shows up as a straight line. My eye sees 5 trends. I suspect we won't like the 6th long-term trend, but who really knows?
I hoarded quite a bit of apparel in recent years. I'm not all that fashionable. I'm all about comfort. I have a ton of clothes in reserve now. Most say "Made in India" on them. You can see the deflation in the chart as apparel was one of the first things to be outsourced. In order to get further deflation, one would think that we'd need to outsource the outsourcing. Who is going to make t-shirts cheaper than India though? What if the global economy turns protectionist someday? Would I still be able to buy a high quality large tall t-shirt for just $10? I did not want to risk it.
We take $10 t-shirts for granted in this country. I can say this. It would take me a lot more than $10 to make one myself, especially if one factored in typical American labor costs.
I also have a lot of socks in reserve. I bought my favorite Gold Toe brand at Wal-Mart. It saved me a lot of money doing that. My local Wal-Mart no longer sells them. They switched to a cheaper brand. I do not regret the decision to hoard them.
Here's the socks sold at Macy's. They want $21 for 6 pairs. That's roughly twice as much as I paid.
I love this sock. No other brand is acceptable to me. I'd pay the $21 today if forced. Fortunately, I don't have to. I may not need to buy socks again for 30 years. That's how many I have, lol.
That said, the tennis shoes I hoarded at Costco have not gone up even so much as a penny. Some of my hoard is performing well. Some is not performing so well. To be perfectly honest, I hope that my hoard was a complete waste of time long-term. I do not root for higher prices.
Here's a look at the seasonally adjusted energy index on a log chart. Constant exponential growth shows up as a straight line. My eye sees 4 trends, but this last trend's data is extremely volatile. The pain, on the other hand, is unmistakable. We are in the pain cycle and there's no telling when it will end.
Some of us believe that stimulus is somewhat of a free lunch concept. We bring future demand into the present and we take on debt to do it. Over the long haul, how does that actually help us? I'm not saying that it is necessarily the worst thing to do, and for temporary shocks it would seem like a really good idea. For structural problems it can't really do much though, and that's what I think we have. There is also absolutely no denying what stimulus has done to energy prices.
In any event, I am not a believer in commodity and/or debt driven stock markets. It's why I call myself Stagflationary Mark and run an Illusion of Prosperity blog.
On March 6, 2009 the S&P 500 closed at 666.79. That was the bottom. It closed today at 1,138.50. That's a 71% gain.
On December 23, 2008 WTI crude traded at $30.28. That was the bottom. It traded today at $81.87. That's a 170% gain. Ouch.
We are clearly still in a commodity and/or debt driven stock market. I therefore continue to embrace the illusion of prosperity, just like I did when I first turned bearish back in 2004.
There is some hope though. I do not think it is guaranteed that the "pain" cycle will last forever. There's even some hope that this pain cycle is getting a bit long in the tooth. It's already been 10 years. Maybe we're halfway done. Who knows?
Any of you who have been involved with this sort of thing realize that conforming to a standard which has not yet been explicated is extraordinarily difficult and promises to be extraordinarily expensive. After a lot of time and money, failure is almost guaranteed. That is why anyone who has a successful track record in IT flees from such projects as if harpies were devouring their entrails. Those of you who have no background in such matters and wish an independent opinion might do well to ask Snarky Mark...
I do indeed have a story.
A non-programmer once told me how much fun it must have been to work on Magic: The Gathering video games. I never worked on them, but I could certainly imagine working on them. Almost every single card in that card game is an exception to the rule. There are few standards. That makes nearly every aspect of creating a computer game based on it to be a complete and utter nightmare, from programming it to storing the data. It could still be fun to some degree, but only if management truly understood just how much time and money it would take to implement. I would not hold my breath on that one!
Several video games based on the Magic: The Gathering franchise exist for multiple systems. Some have attempted to translate the card game to electronic play nearly exactly; others have taken more liberties and drawn more from the setting than the actual rules of the card game. Benefits of successful video game versions of the card game include convenience, practice, and challenge. However, artificial intelligence for a game such as Magic is an extremely hard problem, and such software usually must be continuously updated to stay current with recently released card sets.
Got a question about a card you've never seen before? Having trouble understanding how a new mechanic works? These pages of Magic Frequently Asked Questions (FAQs) will help answer questions regarding new mechanics, rules, and card concepts introduced in each Magic expansion. To look up a particular card, match the expansion symbol on the card to the symbol below, and click that set's FAQ link.
Most of these FAQs have two sections. The first section, "General Notes," explains the new mechanics and concepts in the set. The second section, "Card-Specific Notes," contains answers to the most important questions players ask about individual cards. Items in the "Card-Specific Notes" section include full rules text for your reference.
Pick any one of the many, many links located within. Read the contents. Gasp in horror. Here is a sample chosen at random for comedic effect.
* To recap the last few points with a couple of specific examples: -- If two Zendikons are enchanting the same land, the one that became attached to that land last determines the land's color, power, and toughness. The land has all creature types and all abilities granted to it by either Zendikon. -- If a land such as Celestial Colonnade is enchanted by a Zendikon, then that land's animation ability is activated, the activated ability determines the land's color, power, and toughness. The land has all creature types and all abilities granted to it by the Zendikon and by the activated ability.
Without standards, welcome to the world of the Celestial Colonnades!
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